UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 23, 2008 (September 17, 2008)
TETON ENERGY CORPORATION
(Exact name of registrant as specified in its charter)
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Delaware
(State of incorporation)
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001-31679
(Commission File No.)
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84-1482290
(IRS Employer
Identification No.) |
410
17th
Street, Suite 1850
Denver, CO 80202
(Address of principal executive offices, including zip code)
(303) 565-4600
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions (see General Instruction
A.2. below):
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 1.01 Entry into a Material Definitive Agreement.
Background
As
previously disclosed, on June 18, 2008, Teton Energy Corporation (the “Company,” “we,” “us,” or
“our”) sold and issued $40,000,000 aggregate principal amount of our 10.75% Secured Subordinated
Convertible Debentures due 2013 (the “Original Debentures”) to the purchasers thereof in a private
placement that closed on that date. Our obligations under the Original Debentures were fully and
unconditionally guaranteed by our subsidiaries to the extent set forth in the Subordinated Guaranty
and Pledge Agreement, dated as of June 18, 2008 (the “Subordinated Guaranty”) which was entered
into in favor of Whitebox Advisors, LLC, as agent for the purchasers of the Original Debentures
(the “Representative”).
Pursuant to Section 4.17(b) of the Securities Purchase Agreement dated as of June 9, 2008, which we
entered into with the purchasers of the Original Debentures (the “Purchase Agreement”), the parties
agreed to exchange the Original Debentures for exchanged debentures for the same aggregate
principal amount on terms substantially identical to the Original Debentures, which debentures
would be registered under the Securities Act of 1933, as amended, under a registration statement
that (i) has been declared effective by the Securities and Exchange Commission, (ii) would
ultimately meet the standards of eligibility of the Depository Trust Company (“DTC”), including
with respect to registration on The PORTAL Market, and (iii) would ultimately be issued pursuant to
an indenture in conformity with the Trust Indenture Act of 1939, as amended, and the rules
thereunder.
In connection with the Purchase Agreement and the Original Debentures, we entered into an
Intercreditor and Subordination Agreement (the “Intercreditor Agreement”) with JPMorgan Chase Bank,
N.A. (“JPMorgan Chase”), as administrative agent, and the Representative, pursuant to which the
liens of the Debenture holders on our assets were subordinated to the liens of JPMorgan Chase on
such assets.
Recent Developments
On September 19, 2008, we entered into a Secured Subordinated Convertible Debenture Indenture (the
“Indenture”), with each of our subsidiary guarantors and the Bank of New York Mellon Trust Company,
N.A., a national banking association (“Bank of New York” or the “Trustee”), and, in an exchange
transaction on the same date (the “Exchange”), pursuant to the Purchase Agreement and the
Indenture, we exchanged the Original Debentures for a Global Debenture, which we deposited with DTC
and registered in the name of Cede & Co., as DTC’s nominee. Pursuant to the Indenture, Bank of New
York will act as Trustee with respect to the exchanged Debenture and our obligations thereunder.
Initially, the Trustee will also serve as the paying agent, conversion agent, and registrar with
respect to the Indenture.
The Global Debenture was issued in the principal amount of $30,000,000, following the Holders’
Redemption which is described in Item 2.04 below.
In connection with the Exchange and the closing of the Indenture, on September 19, 2008, we entered
into a letter agreement with each of the parties to the Purchase Agreement, which amends and
supplements the Purchase Agreement to, among other things, appoint Bank of New York as
Representative, replacing Whitebox Advisors, LLC. We also entered into an amended and restated
Intercreditor and Subordination Agreement with JPMorgan Chase and Bank of New York, and an amended
and restated Subordinated Guaranty and Pledge Agreement, which reflect, among other things, the
Exchange and the appointment of Bank of New York as successor in interest to Whitebox Advisors LLC
as Representative and collateral agent.
The foregoing summaries of the agreements and of the transactions contemplated thereby, do not
purport to be complete and are qualified in their entirety by reference to the definitive
transaction documents.
Item 2.04. Triggering Events That Accelerate or Increase a Direct Obligation or an Obligation
Under an Off-Balance Sheet Arrangement.
Pursuant
to Section 6(b) of the Original Debentures, the holders of the
Original Debentures had a 90-day put option whereby they could elect
to reduce their investment in the Original Debentures by a total of
25% of the face amount at the original purchase price. Effective as
of September 17, 2008, we received written notices from each of the purchasers of the Original Debentures that they were
electing to require us to redeem the Original Debentures for 25% of
the principal amount of each Original Debenture (the
“Holders’ Redemption”). Pursuant to the terms of the Original Debentures, on
September 18, 2008, we redeemed such portion of the Original
Debentures, and paid the holders the aggregate sum of $10,000,000
plus accrued and unpaid interest. The applicable amount was paid on
September 18, 2008 to each holder using funds from the original
issuances of the Original Debentures, which were being held in an
interest bearing account established to hold this amount pending the
end of the 90-day put option period.
The remaining aggregate principal amount of the Debentures following the Holders’ Redemption is
$30,000,000, and is due on June 18, 2013.
The Company announced the above item by Press Release dated September 23, 2008, a copy of which is
attached hereto as Exhibit 99.1.
Item 7.01 Regulation FD Disclosure.
The Company also announced by Press Release dated September 23, 2008, a copy of which is attached
as Exhibit 99.1, a $2.0 million increase in the borrowing base with its senior bank facility,
JPMorgan Chase Bank, N.A., from $32.5 million to $34.5 million, updates to its 2008 capital
expenditure program, as well as revenue, EBITDAX and production guidance for the remainder of 2008.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
(d) Exhibits.
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| Exhibit No. |
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Description |
10.1
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Secured Subordinated Convertible Debenture Indenture dated
September 19, 2008 among Teton Energy Corporation, Teton North
America LLC, Teton Piceance LLC, Teton DJ LLC, Teton Williston
LLC, Teton Big Horn LLC, Teton DJCO LLC and The Bank of New York
Mellon Trust Company, N.A. |
10.2
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Letter Agreement dated September 19, 2008 amending and
supplementing the Securities Purchase Agreement dated June 9,
2008. |
10.3
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Amended and Restated Subordinated Guaranty and Pledge Agreement
dated September 19, 2008. |
10.4
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Amended and Restated Intercreditor and Subordination Agreement
dated September 19, 2008. |
99.1
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Press Release of Teton Energy Corporation dated September 23, 2008 |